The Quiet Revolution 2.0

An oft-cited statistic by the Kauffman Foundation states that over five years, almost all job creation in the United States is the result of companies that are less than five years old. Startups, they contend, are the future to job growth. But breaking down the data, we begin to see a large disparity among a demographic that has largely been ignored in the entrepreneurial community: women.

Just look at the statistics. Females constitute 8% of entrepreneurial founders, make up 9.1% of board members in Silicon Valley companies (compared to 16% in the S&P 500), represent 11% of venture capitalists (compared to 29% of vice presidents at investment banks), and account for only 35% of those that even get involved in the startup process of a business (compared to 46% in the general workforce). Consequently, the lack of involvement in the community translates into lower numbers of women accepted into programs like Y-Combinator and significantly less financing than male-led startups (women founders receive 8% of the funding most male dominated startups receive).

These numbers are shocking, but to most people involved in the industry are not surprising. Some people blame the heavy focus on STEM – science, technology, engineering, and mathematics, some blame the perpetual lack of role models, some blame inherent biases, and others blame the “mommy mentality” that plagues most female professionals in other industries. But regardless of the causes, the verdict on women who pursue entrepreneurship as a career is fairly clear: they’re good, very good.

Female founders tend to deliver 12% higher revenues and mixed gender founding teams receive higher amounts of funding from venture capitalists than all male teams. In fact, when it comes to the success and exits of most startups, having a woman on the senior team may double the chances of success, according to a new Dow Jones report. Just the mere presence of a woman creates diversity in viewpoints and increases the number of skills that can be invaluable to creating products for consumers. And the successful panel effects of having women on a startup team and bending ideas are well documented. Given the statistics it is fairly obvious that a key opportunity to strengthening our economic recovery lies in one simple solution: increase female involvement in startup activity.

And despite the challenges, the odds seem to be in women’s favor. More and more females are realizing that the inequities and pay discrepancies in the workforce simply are not acceptable. Women are leaving the workforce in large numbers to start a tremendous number of microenterprises and businesses. Forbes estimates that “women will create over half of the 9.72 million new small business jobs by 2018”. Decreasing costs to businesses and more flexible work hours are enticing more and more women to leave behind their underappreciated corporate jobs in favor of something better.

But the path to more women-owned businesses is not without its challenges. Much work is being done to attract and support women into entrepreneurship, and the systematic challenges and stigmas associated in the old-boy network of Silicon Valley and venture capital boardrooms need to be addressed.

President Obama’s first law that he signed in office was the Lilly Ledbetter Fair Pay Act, bringing the issue of women’s rights – particularly in the workforce – to the forefront of the political arena. And recently, the President has made it a talking point to highlight the benefits of increasing the minimum wage on working women.

But if we really want to get serious about fair pay, we must begin with addressing the disparities for women in the startup community. As begin to see more and more women enter the entrepreneurial workforce (particularly in the Millennial generation), we need to get serious about empowering women not only in Corporate America, but in the startup community as well. Our economy might just thank us for it.


As always, I am always open to emails at timothy.t.hwang@gmail.com, tweets at @timthwang, and Facebook messages at timthwang.

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One comment

  1. A very important issue! Thanks for the stats.

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